Inte tillgängligt på svenska
Gabriel Bobeică
- 13 May 2026
- WORKING PAPER SERIES - No. 3233Details
- Abstract
- We empirically analyse the role of judgement in assigning overall scores by the euro area supervisors as part of the yearly Supervisory Review and Evaluation Process (SREP), which evaluates banks’ risks and sets supervisory actions. We also analyse its role in shaping the drivers of the Pillar 2 capital requirement (P2R) that banks must fulfil. We find that supervisors actively adjust the weight of the components of the overall score to reflect qualitative information, thereby smoothing fluctuations in the final assessment. The analysis reveals a common supervisory judgement channel, which could reflect shared priorities and concerns, such as systemic vulnerabilities or macroeconomic conditions. We also show that certain risks, such as credit risk, can play a decisive role in the overall assessment of a bank’s viability. These findings underpin the critical role of judgement in adapting supervisory frameworks to evolving risks and systemic conditions, providing flexibility at both the individual and system-wide levels.
- JEL Code
- G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
C23 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Panel Data Models, Spatio-temporal Models
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies